On 11 March 2025, the Council of the European Union (EU) agreed on the "VAT in the Digital Age" (ViDA) package (following the unanimous agreement reached by the EU Member States' Finance Ministers on 5 November 2024). A news announcement on the European Commission's website notes that the ViDA package "will be rolled out progressively until January 2035."

The aim of the package is to modernize and improve the value-added tax (VAT) system in the EU to better align with the digital economy and prevent tax fraud. The package covers a directive, a regulation and an implementing regulation and brings changes to three different aspects of the VAT system.

The new ViDA rules can be divided into three pillars:

1. E-invoicing and Digital Reporting Requirements (DRR)
2. Platform economy
3. Single VAT registration

Broadly, the new rules will:

• Make VAT reporting obligations for companies that sell goods and services to businesses in another EU Member State fully digital by 2030
• Require online platforms to pay VAT on short-term accommodation rentals and passenger transport services
• Improve and expand online VAT one-stop-shops so that businesses do not have to register for VAT in every Member State in which they do business

For full details of the ViDA package proposals, see EY Global Tax Alert, EU details on VAT in the Digital Age (ViDA) package, dated 7 November 2024.

Next steps

The directive, regulation and implementing regulation all enter into force on the twentieth day following their publication in the Official Journal of the EU. Although the regulations are directly applicable, the directive will have to be transposed into the national law of each Member State.

Implications

The ViDA changes will have a broad impact on the VAT landscape, and most businesses that operate in the EU are likely to be affected. Businesses should assess the impact of ViDA for their organizations and make the necessary changes to systems and processes well in advance of the new rules' adoption.